BoE published a report on the evaluation of its resolution arrangements by the Independent Evaluation Office (IEO). The report makes recommendations for establishing the roadmap to 2020, working together in structural separation, and preparing for executing a resolution. BoE also published its response to this evaluation.
The IEO concludes that the work of BoE with the industry means that firms are more resolvable now than they were during the crisis and costs of failure would increasingly be absorbed by investors, rather than taxpayers. However, much work remains to be done if the major UK banks are to be fully resolvable by 2022. The following are the highlights of the IEO recommendations:
- Articulate how the institution as a whole will deliver on making the resolution framework operational
- Review appropriateness of the Resolution Directorate skillset as its focus shifts from policy development to implementation
- Consider whether the introduction of the gone-concern regime has been appropriately reflected in PRA supervisory strategy
- With due regard to the legal framework, consider mechanisms to enable greater and timely information-sharing and cross-bank collaboration on resolution issues
- Review governance arrangements for business-as-usual resolution matters
- Formalize governance arrangements for heightened contingency planning
- Set out a strategy internally on how the Bank would deal with a fast death of a firm
- Review the skills needed for heightened contingency planning and agree on a framework for the rapid mobilization of resources
- Agree on a comprehensive schedule of exercises to test the Bank’s operational preparedness for a resolution
In its response to the evaluation, BoE welcomed the IEO evaluation, which recognizes that the Bank has led the way internationally in developing the resolution policy framework and that the decision to prioritize policy development and communication have yielded clear benefits. BoE also welcomed the IEO’s endorsement of the Bank’s decision to make the implementation of the resolution framework one of a small number of strategic goals. The implementation of the IEO’s recommendations will support the Bank to deliver this demanding goal. The Court of BoE had commissioned the IEO to review the effectiveness of the resolution arrangements of BoE.
Keywords: Europe, UK, Banking, Resolution Framework, Assessment of Implementation, Roadmap, BoE
Previous ArticleFSB Issues Thematic Peer Review on Bank Resolution Planning
APRA updated the lists of the Direct to APRA (D2A) validation and derivation rules for authorized deposit-taking institutions, insurers, and superannuation entities.
EC adopted a package that includes the digital finance and retail payments strategies and the legislative proposals for regulatory frameworks on crypto-assets and digital operational resilience.
ECB published an opinion (CON/2020/22) on proposals for regulations amending the securitization framework of EU, in response to the COVID-19 pandemic.
FCA is consulting on its approach to the authorization and supervision of international firms operating in UK.
MAS published amendments to Notice 637 on the risk-based capital adequacy requirements for reporting banks incorporated in Singapore.
FCA announced that it will move firms to RegData from Gabriel in the coming months in stages, based on the reporting requirements of firms.
ISDA issued a letter to regulators to flag that it now expects the supplement to the 2006 ISDA Definitions and the Interbank Offered Rate (IBOR) Fallbacks Protocol to be effective around mid- to late-January 2021.
APRA has concluded its review of the comprehensive plans of authorized deposit-taking institutions for the assessment and management of loans with repayment deferrals.
ESAs (EBA, EIOPA, and ESMA) published the first joint report that assesses risks in the financial sector since the outbreak of the COVID-19 pandemic.
BoE and HM Treasury confirmed that the COVID Corporate Financing Facility (CCFF) will close for new purchases of commercial paper, with effect from March 23, 2021.